Building in the UK Is About to Get 13% More Expensive, BCIS Forecasts.

UK building costs are forecast to rise 13.1% over the next five years, with tender prices climbing even higher at 15.5%, according to the latest Building Cost Information Service (BCIS) forecast.

The figures, covering the five years to Q2 2031, are slightly lower than BCIS's previous forecast in March, which predicted a 14% rise in building costs and 15% in tender prices.

New work output is expected to contract by 2.7% in 2026 before returning to modest growth from 2027 onwards, a sharp reversal from the 12% five-year growth BCIS had previously forecast.

BCIS chief economist David Crosthwaite said rising energy and materials costs are driving inflationary pressure across the supply chain, but weak demand remains the dominant force holding the market back.

The General Building Cost Index rose 1.4% between Q1 and Q2 2026, for annual growth of 3.8%.

Interest rate expectations have shifted sharply. "At the start of 2026, markets were anticipating two interest rate cuts this year," Crosthwaite said. "Expectations have since shifted, with cuts now off the table and a hike a possibility."

Materials inflation has picked up amid ongoing geopolitical conflict, with Brent crude consistently topping $100 a barrel in recent months. A ceasefire has since eased prices, but BCIS called the situation "precarious."

The Tender Price Index, which tracks contractor pricing on accepted bids, grew 3.2% annually in Q2 2026, with low activity levels currently offsetting some of the inflationary pressure on input costs.